Fractal Analytics Blog

Selling Bed, Bath and then Beyond

By Ankur Verma & Bhaskar RoyJanuary 10, 2017

Product bundling is transforming the way airlines do business. These days customers can purchase additional legroom, customize their meals, accelerate through a queue and even book hotels and rental cars.

The hotel industry is lagging behind though, with most hotels offering limited opportunities for guest to customize their stay. As the airline industry has shown, people are prepared to pay to personalize their experience so there is a huge growth opportunity for hotels willing to innovate.

Laser-focused targeting

The first step in tailoring offers for specific customers is micro-segmentation. This means splitting your target market into groups based on their purchasing behavior and interaction with your services. This can be based on demographic, geographic, benefits, transactional and interactional variables.

From booking to checkout, there are multiple opportunities for you to customize their stay for a premium. Micro-segmentation helps you predict the joy and pain points specific groups are likely to experience as they navigate your sales process. By layering these microsegments on top of a comprehensive 360º view built up using the same variables can help you judge, which products it would be most suitable to offer them.

Understanding your customer

Once you’ve segmented your customer base, you then need to survey them to understand where you are delivering on their expectations and where you are not. This can help you determine what offerings your customers expect as a minimum and also where the opportunities lie to upsell new products and services to specific segments such as meals to go, concierge services or luxury linens.

Mapping the opportunities

Once you know what services your guests are interested in it’s important to understand when to offer them. If you want to increase revenues by bundling products you need to map the guest journey and the personalization options appropriate for each stage.

Building the best bundles

Finding out what bundles of products will appeal most to customers at each stage requires a bit of experimentation. Approaches like market basket analysis can help to understand what your most popular offer are and which options are frequently purchased together. This can help you tune your offerings by eliminating redundant offers and focusing on the most popular services. By combining this with customers purchase behavior you can anticipate their needs and automatically recommend the services they are most likely to buy.

Perfect price point

No matter how well targeted you offers are, customers won’t purchase them if you miss their price point. Discrete choice modeling can be an invaluable tool to determine their willingness to pay for the product bundles you are offering. Collecting and analyzing data on things like how many people bought specific bundles, which segments they came from, when they bought them and what competitors were offering can help you target the right customers with the right offer in real time.

A competitive edge

Today’s consumers are becoming ever more demanding; they want everything to be personalized and at the best possible value. With the help of analytics, you can tailor your offerings to make every customers stay unique. Banks, telecom operators and airlines are already taking advantage of this dynamic approach to product bundling and hotels too can use it to improve their customers’ experience while pushing up their profit margins. Hotels with the vision to commit to this strategy will have significant edge over their competition.

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About the authors:

Bhaskar Roy

Bhaskar Roy is a Client Partner at Fractal analytics. He is an MA in Economics and has worked across domain such as Retail, Financial services helping industries focus on CRM, risk analysis and operations.

Ankur Verma

Ankur Verma is an Engagement Manager at Fractal Analytics. He is an MBA in Marketing and has worked in the hospitality, energy, technology and healthcare industries trying to actively contribute to programs which would grow sales.